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In this guide, we cover:
- The basics: employment law
- Pay and taxes
- VISAs and immigration
- Health and safety implications
- Employment contracts
- Policies and procedures
- Security and personal data
- Managing performance
- Communication and Collaboration
- Equipment and infrastructure
- Recruiting and onboarding
The basics: employment law
Pre-Brexit, special provisions were in place for employment contracts (under the European Convention) meaning that parties were free to choose the applicable law in the contract. This was often seen in contracts as ‘laws of England and Wales.’ However, post-Brexit, the EU Exit Regulations state that if a choice of law hasn’t been specified in the contract, then the applicable law is that of the country where the employee is carrying out the work.
This means that even if the employee works abroad for a short period of time, they could gain the protection of local employment rights of the host country. This has implications for holidays, minimum pay, and even termination. With some countries offering greater protection than the UK for things like dismissal, then employees could look to seek these rights (and their contract is terminated whilst there).
- You may need to consult with an employment lawyer to ensure that you have the necessary documentation and permits for the specific country.
- Understand the employment laws of the country the employee wishes to work from or is based in.
Pay and taxes
In addition to employment law rights, there are major implications for tax and pay when it comes to managing employees who are based abroad. These will depend on where the employee is working and where they are a resident for tax purposes. Typically, UK employers are responsible for running PAYE including deductions and reporting to HMRC. This becomes more complex when employees work abroad, even temporarily as it becomes unclear which country’s tax system they fall under.
Government guidance states that employers must calculate and deduct PAYE tax from all payments made to employees working from abroad. It states that you must issue a letter stating:
- The date they went abroad to work
- Details of their gross pay from the start of the tax year to the date they went abroad
- Details of the tax deducted from the start of the tax year to the date they went abroad.
If an employee spends most of their time abroad, over 12 months or more, they may be eligible for full UK tax relief on their earnings. They will be asked to complete a P85 form to send to HMRC to confirm the tax code.
If the employee is working on an overseas contract, the tax authorities of that country could make deductions on their income. Employers will need to be clear about the obligations of both countries and it’s advised to contact the government Employer Helpline.
National Insurance contribution rules vary and depend on the circumstances of the employee and the country in which they are working.
- Check the government guidance for country-specific details.
VISAs and immigration
Any worker wishing to work from abroad (even temporarily) will need to check if any special immigration permissions are required. Employers are advised to conduct ‘right to work’ checks for each location to ensure they are compliant.
Anyone intending on entering a country to work will need to obtain a work visa. In addition, most countries will require that this specifies the work they will be doing as opposed to how long they are staying. In practice, this means that even if an employee is allowed to enter a country for a month as a visitor, they are not necessarily allowed to work during that time.
- Check individual countries’ rules and visa requirements via the UK-based embassy.
Health and safety implications
All employers in the UK have a duty to protect the health, safety, and welfare of their employees no matter where they are working. This includes working from home. This extends to employees working from home whilst abroad and local health and safety laws will need to be observed.
- Check local health and safety laws
- Carry out risk assessments.
Another consideration when managing employees who are based abroad is employment contracts. These will need to be reviewed for employees who are working from another country as they may need country-specific clauses.
In some countries, employers may need to be registered as a legal entity within the country to be able to issue contracts and pay employees.
If an employer doesn’t have an entity in the country then there are companies such as OysterHR and Deel that can act as an Employer of Record and manage the contracts and payroll within the country on the Employer’s behalf (subject to a monthly fee).
Policies to have in place when managing employees who are based abroad
If it’s likely that employees will want to work from abroad it’s advisable to implement a ‘working from anywhere’ policy to cover off requests. This should include:
- Details of the process for employees to apply to work abroad.
- Details of working hours, taking into consideration time zones.
- Employer and employee obligations.
If agreed, employers should have a written agreement with the employee about liabilities and responsibilities. This includes who is liable for additional taxes and it’s advised that employees seek their own personal tax advice.
- Create a policy to deal with requests.
- Create a written agreement to protect both the employee and employer.
- Consider whether it’s advisable to seek tax advice on the specific host country.
Scenario: hiring an employee already based abroad
Before you hire any employees, you will need to check that they have a right to work in the UK. Employers are also required to operate PAYE and tax for any employees, even if they are being employed temporarily. Refer to the government guidance.
Security and personal data
Working from abroad may have implications for data breaches and privacy violations.
You might have experienced a situation where you’ve attempted to buy a product or service with a credit card while abroad and the transaction has been refused. You know you have sufficient credit but when you enquire, you find it’s because they didn’t know you were going away so they considered it a likely fraud attempt.
Well, the same can happen with your employee’s data access. Modern IT setups are moving to a “Zero-Trust” security arrangement whereby it’s not just the person requesting access that needs to be authenticated but the device as well. With this type of arrangement, “conditional access policies” are set up, ie access to company data is only available under strict conditions which are defined by company policies and managed by the IT team. The platform that’s hosting shared folders – for example, Microsoft Sharepoint or Google Drive – can be configured such that only requests from specific countries will be accepted. In other words, even if the request appears to come from the correct user on the correct computer if the IP address shows the user to be in another country, it will be denied.
So, to avoid these kinds of challenges, it’s important to work with your IT team and devise policies that can be implemented and managed successfully. For example, if an employee is due to work in multiple countries then either their conditional access policy is loosened to accommodate them or a list of all the countries they might work from needs to be added.
Working abroad can be challenging for both employers and employees. Issues like language barriers, time zones and cultural differences can all pose challenges.
Another challenge managing employees who are based abroad can be maintaining the company culture or fostering a sense of team. This means that team building is essential and company culture will need to span different locations when managing employees who are based abroad.
- Put a strategy in place detailing how performance will be managed in the long-term remotely.
- Agree on mutually convenient times to meet and catch up as a team and with managers
- Use communication tools to ensure connectivity (see below)
- Encourage regular team-building activities via video to keep the team connected.
- Be flexible with schedules taking into consideration different time zones and employees’ work/life balance.
- Set clear goals and outline expectations: this way everyone understands their roles and performance expectations.
Scenario: employee is required to work abroad by the business
If the employee is being asked to work abroad temporarily by their employer then they need to ensure they have the correct work visa, payroll, and tax compliance. The employer may wish to provide support and resources to help the employee acclimatise to the new country and work environment. This could include covering moving expenses, language classes, cultural training, paying for initial tax advice, and resources for healthcare and other needs.
Communication and collaboration when managing employees who are based abroad
Good communication tools and infrastructure is essential.
Due to the various lockdown enforcements over the past three years, most of us will be familiar with remote working and realise how important it is to use technology like messaging and video-conferencing to share news and maintain relationships with colleagues and customers.
Employees in other countries will be even more affected because of differences in culture, language, and time zones.
So, it’s very important to provide technology (and technology support) that has multi-language and multi-currency features.
If the IT helpdesk is able to support you during UK office hours only then you should try to organise one of the following:
- Extended hours remote support whereby your employee in, say Hong Kong at 10 am, can reach a helpdesk in the UK when it’s 3 am.
- A local support service whereby your employee can speak to someone in Cantonese, located in Hong Kong.
Scenario: employee wants to start spending some of their time working abroad
Even if it is the employee’s desire to spend some of their time working abroad there may be legal and financial consequences for the employer. The employer may need to take advice to ensure they have the correct work visa, payroll, and tax compliance. If these are in place consider a trial period on a short-term basis initially to assess how the arrangement works for both parties. Build in regular reviews and ensure everything is documented in writing.
Equipment and infrastructure
When a board director specifies a brand of PC or software that’s different from the company standard, it’s tempting to concede and accept the consequences. However, if that director starts to work from abroad the potential for operational problems and support challenges all expand exponentially.
IT is most reliable when it’s consistent when there’s conformity. When a foreign location is brought into play, a new set of factors increase the likelihood of technical issues. Diagnosing and resolving those technical issues over a remote connection (which may be slow anyway and then affected by the inherent latency of an international internet connection) is a further challenge.
If the equipment or software being used is in any way different from the equipment and software the rest of the company uses, then the poor IT engineer has the odds stacked against them.
So the conclusion is, try to define the standard company equipment and software set-up bearing in mind overseas use ie stick to the major OEMs who offer international next-day warranties and business support. Then apply these policies as tightly as possible – explaining to employees that the reasons they can’t always have what they want is to protect them from unforeseen consequences and to give them a reliable platform for work.
Recruiting and onboarding workers from abroad
Remote hiring is now the norm for many businesses and now opens up opportunities to recruit from anywhere. There are various routes open to employers:
- Following the UK’s departure from the European Union in 2020 the government introduced a new UK points-based immigration system. Under this new system, all applicants (whether EU or non-EU) will require a job offer from an approved sponsor. This will need to be at the required skill level and they will need to demonstrate they can speak English.
- Most employers choose the ‘skilled workers’ route which has specific requirements. These include a minimum skills threshold, and a minimum salary threshold and does include a range of costs that include visas, sponsorship licenses, and an immigration skills surcharge. Visas can also extend to dependents of the skilled worker. It’s important to note that non-UK citizens are required to pay an Immigration Health Surcharge of £400 per year. Some employers choose to pay this on their behalf.
- The Global Business Mobility category allows employers to fill skills gaps in their workforce. It covers three sub-categories: senior or specialist worker, graduate trainee, and secondment worker.
- Take a look at the points system to understand who is eligible.
- Check original documentation for all new employees. These must be done before the employment begins and in a non-discriminatory manner.
- Compare overseas qualifications with UK-recognised.
- Seek advice from HR consultants or a specialist recruitment agency to protect your business.
- The CIPD has useful fact sheets about recruiting overseas workers.
- Clearly define what support would be available to an employee moving to the UK from abroad as a successful acclimatization means that the employee can be more productive sooner. Does the employer have the financial and operational resources to help an employee set up their life in the UK?
- Ensure that the employer has a robust interview process and carefully explains the expectations of the new role, this will avoid costly misunderstandings or failed relocations.
- Create an onboarding plan for new hires to incorporate the first few months of their appointment. Include video appointments with key personnel (including MDs so that employees understand who is in the business).
Whilst it may seem like there are numerous hoops to jump through and considerations when it comes to managing employees who are based abroad, the benefits can outweigh these. Just a few benefits:
- A happy, motivated workforce who are likely to stay with the business if offered flexibility.
- Access to a diverse and skilled workforce.
- Positions your business as an attractive employer – helping with recruitment in a crowded marketplace.
- This can lead to increase productivity through a motivated workforce.
- Improves the well-being of employees leading to a happy, healthy workforce.
Cubit Technology is an IT Support company in London. It has over 25 years of experience in helping the needs of media, marketing, and creative agencies, our comprehensive technology solutions help agencies to optimize their operations and harness the full potential of technological advancements.
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